π Section/Student Qs for Lecture 4
Agenda for Saturday Section, July 6 β
- Slide Review, concentrating on the most important and challenging slides from this weekβs lecture.
- Pages about this lecture on this website. Read π§ Getting Oriented for how to find them on the site.
- Office Hours. Click here for notes and timestamps. Email office hour questions to robecon1452@gmail.com and I will cover them next section.
Click here to learn about timestamps and my process for answering questions.
π Questions covered Saturday, July 6
π£
β Can you go over some graphs showing anomalies
β Done during section
π£ 3:10
β Will we have a review session?
β Yes, Iβm taking over the class meeting on Wednesday.
Red Herrings in PS Questions
π£ 5:09
β Do Problem Set questions ever include information that isnβt needed to solve the question?
β Yes. Much like in real life, you sometimes have additional information and need to independently identify which information helps you solve a problem.
π£ 5:09
β Feedback Form Message: Hi there,
Iβm kind of confused by the term βLending range slope,β like lending money to a borrower. Isnβt it just the portfolio with 1 risk-free and risky asset?
Page URL: https://1452.robmunger.com/l1/1outline/
β Thanks! Iβve rewritten this.
π£ 5:09
β Feedback Form Message: The equation for standard deviation:
arrows arenβt pointing to the terms
Page URL: https://1452.robmunger.com/l1/keyformulas/
β Indeed, I decided to forgoe lining them up because it wouldnβt look good on mobile devices. Instead, Iβm switching to color coding and have added color coding to the standard deviation equation. Thanks!
π£
β Feedback Form Message: What is the variance of Natβs first complete portfolio, with
Variance = .135^2 = 0.018225
b/c sqrt(0.018225) = .135
0.018225*100 = 1.8225%
Therefore, I think it should be the square root of 182.25 or 13.5%
Page URL: https://1452.robmunger.com/l1/keyformulas/
β Clarified
π£
β Feedback Form Message: Hi Rob,
Iβm confused about how the Ο_p is calculated. Why doesnβt it include a covariance term?
β =.5Γ20%+.5Γ12%=16%
Page URL: https://1452.robmunger.com/l1/diversification/
β Itβs a special case.
π£
β Feedback Form Message: The Sharpe ratio of the risky portfolio is the slope of the CAL, and it tells you how much risk-premium we get for each unit of risk we take.
How do you interpret the Sharpe ratio of the complete portfolio?
Page URL: https://1452.robmunger.com/l1/rewardtovolatility/
β Just like any other Sharpe Ratio. Note that it is often equal to the Sharpe ratio of the risky portfolio, because the risk-return tradeoff is the same for both portfolios. Itβs just that the complete portfolio has a smaller amount of risk and return.
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β Feedback Form Message: It would be nice to have the sidebar of menus uncollapsed at default.
Page URL: https://1452.robmunger.com/
β
Whatβs Beta?
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β Feedback Form Message: Whatβs Beta?
Page URL: https://1452.robmunger.com/l2/bigpicture/
β We covered this during section.
CML vs SML
β Feedback Form Message: what is the security market line? is the same CAPM line?
Page URL: https://1452.robmunger.com/l3/2000/
β We covered this during section. The security market line is just the CAL when the risky portfolio is the Market portfolio. CALvCMLvSML
s1452 Help Links: π¨βπ»
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- Email office hour questions to robecon1452@gmail.com. PS1Q2=βQuestion 2 of Problem Set 1β
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